Timothy Geithner has ruled out
discussion of the yuan at the
meeting in Delhi with Manmohan Singh

The US Treasury Secretary will meet India’s Prime Minister and Finance Minister today in talks that risk being overshadowed by America’s increasingly tense relationship with China.

On Saturday, Timothy Geithner delayed a report to Congress that could have branded China a “currency manipulator”, which may have led the United States to impose tariffs and other trade sanctions on the world’s biggest exporter.

The delay was regarded as an attempt to cool the debate over the currency amid calls in the US for punitive measures unless China changes its policy. Scores of congressmen believe that the undervaluation of the yuan, which is pegged to the dollar, enables a flood of cheap Chinese exports that undercut American products.

Mr Geithner has pointedly ruled out discussion of the yuan at the meeting in Delhi with Manmohan Singh, the Indian Prime Minister, and Pranab Mukherjee, the Finance Minister. However, the currency row threatens to undermine a visit designed to elevate America’s relationship with India.

The US trade deficit with India was only $5 billion last year, compared with $226 billion for China. India and America recently agreed a framework for trade co-operation that Ron Kirk, the US Trade Representative, said would tap the “almost limitless potential for growth”.

Last November, Dr Singh became the first world leader to be invited on a state visit to the Obama White House, demonstrating India’s importance as a potential counterweight to China in Asia and as an ally against Islamist extremism.

Today’s meetings are likely to focus on macroeconomic stability and on how American companies can win work upgrading Indian infrastructure — a $1 trillion task, according to one estimate.

India’s 26 per cent limit on foreign investments in its insurance sector, and American restrictions on some high-technology exports are other likely topics. The two countries may also try to agree on a common front to present at the next G20 meeting in Toronto in June, where the yuan is likely to be discussed.